Bates v. American Mortg. Co. of Scotland

• Decision Date: 13 February 1893
• Citation: 16 S.E. 883,37 S.C. 88
• Parties: BATES v. AMERICAN MORTGAGE CO. OF SCOTLAND, Limited, et al.
• Court: South Carolina Supreme Court

16 S.E. 883

37 S.C. 88

BATES v. AMERICAN MORTGAGE CO. OF SCOTLAND, Limited, et al.

Supreme Court of South Carolina

February 13, 1893

Appeal from common pleas circuit court of Barnwell county; J. F IZLAR, Judge.

Action by Savannah E. Bates against the American Mortgage Company of Scotland, Limited, and another, to restrain the sale of land on a mortgage. Plaintiff had decree, and defendants appeal. Affirmed.

On the trial on pleadings and proofs the court (IZLAR, J.) filed the following opinion and decree:

"The plaintiff, a married woman, brings this action to perpetually enjoin the defendants, their agents and servants from selling the lands of plaintiff, or otherwise interfering therewith, under and by virtue of a certain note and mortgage set forth in the complaint, and the power of sale contained in said mortgage, and for such other and further relief as may be just. The facts alleged, and on which the plaintiff asks this relief, are that she was a married woman at the time of executing said mortgage upon her separate property and that the same was executed by her as security for a loan effected by her husband, J. B. Bates, through one W. H Duncan, the agent of the defendant corporation; that the moneys obtained on said security were received by her husband, and applied by him to the payment of his own debts and not to the uses of the plaintiff or for the benefit of her separate property, and that the object for which said loan was obtained was well known to the agent at the time the same was negotiated. The main issues raised by the answer of the defendants are as to the agency of the said W. H. Duncan and the notice to the defendant corporation that the money loaned on said security was to be applied by the husband of the plaintiff to the payment of his own debts, and not to the use of the plaintiff, nor to the benefit of her separate property. The case was heard at the March, 1891, term of the court of common pleas for Barnwell county, aforesaid, upon the pleadings and evidence previously taken. The issues raised were argued at length by the counsel of the respective parties.

Before entering upon a discussion of the legal questions involved, it becomes necessary to state as concisely as possible our conclusions of fact as found from the testimony. In arriving at these conclusions, we deem it proper to say that we have made a careful study of the testimony in all its bearings, and have given to it such weight as, in our judgment, it is entitled to. We are not favorably impressed with the testimony of Frederick W. Dunton, examined on behalf of the defendants. It does not strike us that this witness was actuated by a desire to 'speak the truth, and the whole truth,' but rather by a desire to evade and keep back the 'whole truth,' especially when we take in to consideration the fact of his long connection as a partner with the Corbin Banking Company, his opportunities of acquiring a thorough knowledge of its business methods and its business transactions, and his very recent withdrawal from the partnership. The following facts are, in our opinion, sustained by the weight of the evidence, in the light in which we view it: On the 2d day of March, 1885, the plaintiff, then a married woman, having a separate property, signed an application for a loan of one thousand dollars upon her plantation in Barnwell county, aforesaid, containing two hundred and thirty acres, giving description and quality of the land, with a plat thereof attached. This application contains the following clause: 'I understand that if this application is negotiated by W. H. Duncan it will be upon the representations herein contained, which are true in all respects, and are made by me to be used by him as my agent in procuring for me the loan;' and is signed 'S. E. Bates, applicant.' On the 25th day of April, 1885, the plaintiff signed another paper, of which the following is a copy: 'Whereas, I have this day employed W. H. Duncan to negotiate for me a loan of $1,000.00 for a term of five years, with interest at the rate of eight per cent. per annum upon a note and mortgage securing the same, which shall be a first lien upon my farm in Barnwell county, S. C.: Now, then, if he shall succeed in negotiating said loan within thirty days upon the usual conditions exacted by the eastern money lenders as to security, perfecting of title, insurance, etc., I agree to pay the said W. H. Duncan the sum of $200.00, which shall be in full of his commissions and negotiation. I also agree to furnish an abstract of title to the farm, and to pay the fee for recording my mortgage.' And on the

1st day of May, 1885, the plaintiff signed a receipt, of which the following is a copy: 'Received from the Corbin Banking Company, one thousand dollars, proceeds of loan negotiated by them for me with the American Mortgage Company of Scotland, (Limited,) less commissions as agreed.' The note and mortgage referred to in the complaint were executed by the plaintiff on the 25th day of April, 1885, and the mortgage recorded in the register's office for Barnwell county aforesaid, on the 4th day of May, 1885. The Corbin Banking Company, of New York, was, at the time of negotiating the loan in this case, doing a general banking business, and engaged in negotiating loans in the southern states, secured by mortgages of real estate, for various companies and corporations in this country and in Europe; and the said W. H. Duncan held himself out to the public in negotiating loans in this state as the agent of the said Corbin Banking Company, and that the loan negotiated by him in this case was as such agent. The Corbin Banking Company, in effecting said loans, furnished all the necessary blanks for applications, etc., to its local state agents, fixed the terms, examined and approved the securities offered, paid over the moneys loaned for the lenders, took the receipts for same in their own name, shared in the commissions, and looked after the collection of the securities. The moneys loaned in this case were secured by the note of the plaintiff, and a mortgage of her separate real property; and the moneys thus obtained were applied by her husband, J. B. Bates, to the payment of his own debts, and not expended by the plaintiff, or for the benefit of her separate property, and that no part of said money ever came into the hands of the said plaintiff. William H. Duncan was informed by J. B. Bates, the husband of the plaintiff, at the time the application for said loan was made, that the money was wanted to pay his debts, and that his wife would sign the mortgage to secure the loan, in order that he might get the money. In negotiating this loan the evidence does not satisfy me that J. B. Bates was the authorized agent of his wife, and effected the loan for her.

This action was commenced on the 1st day of August, 1890, and thereafter an order was made by Judge JAMES ALDRICH restraining the defendants from further attempting to sell the property of the plaintiff under the power of sale contained in said mortgage, until the cause was heard and determined on its merits.

We think it now the settled law of this state that it is necessary, in an action to enforce a contract executed by a married woman, to show that such contract was made with reference to her separate estate, and that the burden of proof is upon the party seeking to enforce such contract; and that, while a married woman may borrow money for her own use, either directly or by her husband as her authorized agent, and secure the same by a valid mortgage of her separate estate, yet, she cannot do this for the benefit of her husband, provided the lender has knowledge of such intended use when he makes the loan. These propositions have been so recently and plainly decided by our supreme court, and are so well known to the profession generally, that it would be a waste of time to review the cases. See Tribble v. Poore, 30 S.C. 97, 8 S.E. Rep. 541; Gwynn v. Gwynn, 31 S.C. 482, 10 S.E. Rep. 221; Greig v. Smith, 29 S.C. 429, 7 S.E. Rep. 610; Goodjoin v. Vaughn, (S. C.) 11 S.E. Rep. 351; Salinas v. Turner, Id., 702. It is enough to say the cases are recent, and fully sustain the propositions laid down. Applying these principles to the facts as found in this case, there can be but one conclusion, namely, that the note and mortgage executed by the plaintiff herein to the defendant corporation, and now sought to be enforced by said corporation against the plaintiff, are void, and therefore not binding upon her, or enforceable against her separate property.

As this case, however, turns mainly upon the question of agency of these middlemen of the defendant corporation, and the notice to them of the object for which said loan was obtained, it becomes necessary, perhaps, that we should discuss briefly the facts relating to this question, and the law applicable thereto. The defendant corporation, it is evident, had money to lend, and this money it was willing to intrust to the Corbin Banking Company to lend, if said company was satisfied with the security. The Corbin Banking Company was engaged, as we have seen, in negotiating loans on real estate security in the southern states, for foreign corporations. The moneys, as well as the securities to be taken therefor, were intrusted to the Corbin Banking Company. The company sought and effected these loans by and through their agents at different points, to whom they furnished printed blanks for making applications for loans. They fixed the terms, examined and approved the securities offered for those who had intrusted them with moneys to lend, and looked after the collection of the securities for those persons for whom they acted and made loans. We find nothing in the testimony to satisfy us that the defendant

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